The owners of Bowen Coking Coal have placed the company into liquidation but say its operations will continue to trade on a “business-as-usual basis while a sale and/or recapitalisation process is undertaken.”
“This includes the operations at the Burton Mine Complex located in the Bowen Basin of Queensland, which will continue uninterrupted,” it said in an investor announcement.
Mark Holland and Shaun Fraser from restructuring firm McGrathNicol have been appointed as voluntary administrators, and a meeting of creditors will be held by Aug. 8.
“The decision to appoint administrators reflects the current challenging environment for the coal industry in Queensland from higher costs, lower global coal prices, and higher royalty rates introduced by the Queensland government in 2022,” the company said.
The business was hit by a fall in demand for coking coal—Asia’s seaborne imports of metallurgical coal dropped to the lowest in three years in February, amid a slump in demand from top buyers China and India. This occurred right after the former cash-strapped Queensland Labor government raised mining royalties.
Increased Royalties Since 2022
From July 1, 2022, the then-Labor government raised charges from a flat 15 percent a tonne to a stepped rate of 20 percent on each tonne of coal sold for more than $175; 30 percent for prices above $225 a tonne; and 40 percent for prices above $300 per tonne.
In New South Wales and Western Australia, coal royalties are set at under 10 percent.
The elevated rates were implemented during a period of record coal prices driven by the COVID-19 pandemic and subsequent global supply chain disruptions.
They successfully boosted the state’s finances, resulting in a $12.3 billion (US$8.3 billion) budget surplus for the 2022-23 financial year, but meant that miners whose operations were already only marginally profitable began struggling.
Bowen Coking Coal sought deferment of its latest royalty payment, but the Queensland Revenue Office (QRO) turned it down.
The company had also failed to negotiate new arrangements with its former mining contractor, BUMA Australia, and its senior secured lender.
BUMA had lodged a creditor’s statutory demand for $6.82 million, which had to be paid by August 4. As part of wide-ranging cash conservation measures, Bowen hadn’t renewed BUMA’s contract when it expired on July 1, instead announcing that the Burton mine would henceforth be owner-operated.
The decision puts around 500 jobs at the Burton mine near Moranbah at risk. Burton is a significant employer in the region, and its uncertain future will have a ripple effect throughout the local economy and mining supply chain.
Trading in the company’s shares remains suspended. It has a current market cap of $8.08 million ($5.20 million), and its last share price was 4 cents.
